BUSINESS

Loonie closes slightly lower as commodity prices improve, US data disappoints

03/21/2012 09:05 EDT | Updated 05/21/2012 05:12 EDT
TORONTO - The loonie moved slightly lower against the U.S. dollar Wednesday as commodity prices improved, while a report on U.S. home sales last month disappointed.

The loonie was down 0.05 of a cent to 100.78 cents US, reversing an earlier gain.

Gold added $3.30 to US$1,651.10 an ounce, while copper moved up two cent to US$3.85 a pound. The May crude oil contract was up $1.20 at US$107.27 a barrel.

On Tuesday, concerns about China's economy sent investors to the greenback. That depressed commodity prices, which are denominated in the currency, as it makes them more expensive for holders of other currencies.

In Canadian data, Statistics Canada said Wedneday that its composite leading index, which offers a snapshot of the health of the economy, rose 0.6 per cent in February after rising 0.4 per cent in January.

The federal agency said it was the eighth consecutive monthly increase in the index and that six of its 10 components were higher.

The largest gains came in the financial sectors, with the stock market recovering after eight monthly declines and the money supply component continuing to expand.

Manufacturing was supported by an increase in new orders and the ratio of inventories to sales rose for the fourth consecutive month. The housing component edged down following five monthly gains and sales of furniture and appliances were also down.

"Canada’s leading economic indicators continue to strengthen for the eighth month as they were up 0.6 per cent this latest month, as expected," said Bob Tebbutt of Peregrine Financial Group Canada Inc.

"However, the Canadian dollar has been moving sideways on concerns over the slowdown in growth in China against the increased economic performance in the U.S."

Recent signs from the U.S. have pointed toward an improving economy. But traders reacted Wednesday to some mildly disappointing news on U.S. home sales, an important gauge for Canadian companies that have ties to the housing market south of the border.

The U.S. National Association of Realtors said home sales fell 0.9 per cent last month to a seasonally adjusted annual rate of 4.59 million. That followed a revised 4.63 million in January — the highest level since May 2010. Economists had expected a February gain of 0.9 per cent.

Still, the last three months have been the best for winter sales in the United States in five years. The progress is encouraging ahead of the spring buying season, although sales remain below the six million that economists equate with healthy markets.